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SavingsPinay Series | Day 2: 25 na Paraan Para Makapagbayad Ka Sa Utang (25 Ways to Pay Off Your Debt)

Tuesday, October 27, 2015
The SavingsPinay Series | Ayoko sa Utang! 5 Days To Be Debt-Free For Life is created and published first in this blog. Visit this LINK for the past SavingsPinay Series.

PS. Sorry Day 2-5 is one week delayed. Hope you will still learn and enjoy.

Day 2 | 25 na Paraan Para Makapagbayad Ka Sa Utang

Mahirap ang mabaon sa utang. Imagine the struggle one will feel in the situation. You won't have any financial peace. Everything that you do is one step forward and two steps back. You will be bombarded with texts, phone calls and letters sent to your home address or office.

Getting out of the situation is the only option you have. The more na tumatakas ka, the more that you'll live an unhappy life. Your goal is to find ways to get out of debt. No matter what it takes and no matter how long you have to hustle.

Creating this series is my way of sharing what I've learned from my parents, from the books I read and from the other blogs I adore. I compiled each and every learning and added my own point of view. I wanted this series to show an easier and doable means to pay off your debt. 

Below are 25 of the Most Effective Methods to Pay Off Your Debt. These steps guarantee that you can free yourself from personal debt, car loans, salary loans, credit card dues and mortgages that involves a lot of money owed for a long period of time.

If you have already evaluated your debt. READ: DAY 1 then here are proven ways you can apply in your life to get out of debt at last.

1. Create a Budget

A fundamental financial concept that all of us should learn and commit to is a budget. I can't stress enough on how a budget can save you a lot of money. It is no doubt the very first step in solving your debt problem. Download financial apps if you see it at as a more convenient method. Use an excel spreadsheet if you want it manually or a notebook for a traditional manner. I have full post about budget to help you get started. Click HERE.

2. Pay the Most Expensive Debt First

This particular tip has been shared for a lot of times already and it definitely works. Once you have evaluated your debt you'll surely know which has the highest to lowest interest rate. Now, interest rate deserves its own post but to discuss it briefly, is the annual percentage of the loan outstanding. Now, a great strategy to get out of debt fast is to pay the most expensive debt first. As you increase the payment on the credit card with the highest percentage you'll also get out of it faster but still making sure to have minimum payment on the rest of your low percentage debt. 

3. Don't Get into More Debt

This maybe a hard one but just please, refrain yourself from getting into more debt. Live below your means and remember that every piso counts. Do not dwell on the things that you can't have to impress others but rather try to hustle and pay for your current debt first. What you are doing is rebuilding your financial wealth for a better future. 

4. Increase Your Income 

This isn't an easy one but still try to have a new way to earn income. You can read my post on 15 Smart Ways to Earn Extra Income for some example. Manage your spare time and use it  to your advantage. Never settle with just one source of pagkakakitaan because it isn't enough. The lifestyle we live today plus the debt that you owe can only be met and solved with extra money. 


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5. Pay with Cash

If you really want to stop getting into more debt then you have to stop using and bringing your credit card with you. Paying with cash will give you consciousness with how much money is getting out of your cash flow. You also don't accumulate more money owed in banks. You become more responsible in how you use your hard earned money.

6. Put Bonuses and Extra Money to Pay Debt

Now that the end of the year is near, we all are sure excited for the bonuses, 13 Month Pay and extra money coming. If you are in debt then this could be a great opportunity for you to step up your game. Automatically put all your extra money to pay debt. I know, I know this is the saddest thing ever considering all the hard work from the past year but at least you are off to a better start in a new year. 
7. Change Your Behavior Towards Money

Remember my Money Resolution post? I gave away some habits I wish to break or to hopefully resolve. You should remember that your routines and habits can get you out of debt. Being careful in how you spend your money daily, weekly and monthly can save you some amount to pay off your debt. The little sacrifices in your lifestyle can make a big change.

8. Sell something

This can count as part of a way to get additional income but if you are really determined to pay off your debt the in all means sell something. Maybe you can sell your talent (just like what I did when I started hosting events and getting freelance writing gigs). You can also sell your old stuff like a garage through Instagram. 

9. Pay More Than The Minimum

My sister (who actively use her credit card) told me to break the habit of paying only the minimum required for each month.  Settling for this method in paying for your credit card debt will only prolong the agony. The increased payment you make when you pay more than the minimum will save a lot of money in interest payments. 

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10. Talk to Family and Friends for some assistance

You shouldn't be too hard or too ma-pride to admit to your family and close friends (whom you think can understand the situation) and get some help. Your family and friends will be the only ones who'll trust and love you after all. Try to explain to them the problem and ask if there are ways they could help. Keep whatever promised repayment date you said and never ever try to miss paying on time without any explanation. This can affect your relationship as family.

11. Talk to Your Creditors

On Day 4, Thursday I will give an idea on how to talk to your creditors but as a primer, one way you can get out of debt is to just talk to your creditors. Explain to the creditor the problem and tell them the solution you think will help.  You can also create a promissory letter  on the amount you can afford to pay and when. Trust that they will understand. At least you didn't runaway from what you owe.

12. Spend Less Money

If you can't possibly earn another income then you can consider spending less money than the usual instead. There's always something you can avoid or sacrifice buying. Maybe that latte or perhaps that too much unnecessary load. You can also try lowering your electric bill through efficient use or becoming a smart shopper. I know some who cut their cable off just to have additional income.

13. Do the Debt Snowball Method.  
The Debt Snowball Method suggests that you pay the smallest debt first. Once the smallest debt is done, you take the monthly payment on your next smallest debt until your debt is done at last. Because you are first paying for the smallest debt, you can easily feel the success and this will motivate you to stay focused on your goal.

14. Speaking of goal, Make Paying Off Debt Part of Your Goals in Life
It will always be essential that you set a debt-free date. Make it a goal and put it somewhere you can see it. This will also inspire you to keep going. You can write on a piece of paper something that goes like this: "Be Debt-Free Before 1st Quarter of 2016 ends" A goal may not give you extra money to pay but it could inspire you to continue and chase your financial dream. 

Numbers 15, 16, 17, 18 and 19 are for Extreme Measures. Do it as long as you know the risks

15. Use your Savings Account
I know you are saving this amount maybe for your emergency fund or for the rainy day seasons. However, getting rid of your debt is the real deal at the moment. As long as you have that debt you will be trapped in your current financial dilemma. Just make sure you still have a few amount to spend once a real emergency exists. 

16. Use your Life Insurance. 
The cash value in life insurance policy can be "borrowed" to pay off debt. Just check with your provided if this applies. Also be reminded that you might pay a small processing fee for this financial move.

17. Use your Pension Plan. 
Pension Plans work the same. Some company pension plans let you borrow the money from the account and lets you agree on a policy. 

18. Use your Home Equity Loan. 
If ever you own a home with substantial equity then you can also do this technique. Try to get some money out of the investment and repay your debt. If you were lucky enough, some home equity loans may be tax-deductible.

19. Use your Investment. 
As an added reserve you can easily withdraw your invested amount and use it to pay for your debt. This can be easily done on mutual funds operated by private financial companies. Make sure to use it on real emergency only and repay the amount as soon as possible.

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20. Make it work for YOU. 
No matter how many tips, techniques or tactics there is in the web, books or other blogs. What matters most is whether it can work for you. Make sure you are following a repayment plan that's set to how much your income is and the lifestyle you don't mind having. Stay diligent in paying on how the repayment method you chose work. 

21. Fight Off the Discouragements. Don't give up and always believe that you can do it. There will be times when you will doubt whether you can really do it and pay for your personal debt, loans and mortgages perhaps but know that soon it will all be settled. 
22, 23, 24 and 25 are four things you can do today that can make a big difference to pay-off debt.

22. Get Counseling.

If it is your credit card debt that's causing you to be in debt like forever then try to get help from professional. This can help you pick up the pieces of your financial life again.

23. Be More Intentional in Your Spending.

In my post, How to Correctly Spend Your Money 

I shared how important it that we remain intentional in how we spend our money. I even expressed that the art of financial planning is not only centered on budget, savings, investment and others. Proper spending should also be discussed. Spend your money wisely.

24. Make a List. 

Evaluating your debt is just the primary step to get out of debt. Getting a clear picture on how much your debt is and when it's due can help organize everything. The more organize your repayment debt is the faster you can pay for your debt. Thus, you can get out of debt faster too.

25. Pray.

Don't be afraid to cry out to God your financial worries. God knows what's going in your life at the moment and He is in control. Pray that you will have the energy to carry all the financial problems. Always be in constant communication with the Lord even if its about your debt.

If you did the steps above can you share it to me? Comment below and find accountability partners from other SavingsPinay Readers. You can also go to the SavingsPinay Facebook Group and join others who share their saving, budget, investment, productivity, career and other financial problems, questions and issues.

I hope you liked this post. Don't forget to do any of the following:

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